Those banks that contributed to the real estate collapse of 2008 should have been left to suffer the consequences brought about by the market. They should have gone bankrupt and everyone should have gotten off the credit crack pipe at that time. It didn’t work that way, and now it’s far,far worse.
There’s a tsunami coming. The ocean is receding from the beach and the ignorant masses keep building their castles in the sand.
I completely agree with you. Even though bailing them out was the right decision at the time (because you’d have civil unrest otherwise), what should have followed immediately after that was to break all banks into smaller, resilient banks.
In such a system individual banks go bankrupt with some frequency but the system overall is healthy as banks compete with each other.
What we have now is unhealthy and subject to bloat and eventual blowup.
Where do you escape to when the whole world is affected by Fed’s decisions?
Yep. You move to an alternative system which isn’t subject to the same structural risks.
Crypto may be volatile but structurally it has less risk. Along with banks I’d also add large tech companies in this space, adding to this level of instability.
Timing economic downturns is a hard thing to do. No one knows what triggers them but when the next one comes, the Fed might have exhausted all its options.
In doing so I hope you don’t just point to banks and say it’s their fault.
I don’t believe it’s fair point to any active economic participant in a free economy and place the blame of the system on them.
They will use all legal means to maximize shareholder value. It is their prerogative. If they choose to have social responsibilities it’s their choice but their obligation is to create value for shareholders.
Blaming them is like driving the car off the cliff but saying “man that engine or wheels did it”.
Banks, companies, individuals all play an important role in the economy, it is when one set of actors overwhelmingly dominates the agenda that we introduce instability.
Economic woes are in fact governance failures. In the US for example, corporate lobbying represents a systemic threat that undermines resiliency.
Current fiat currency system is set to fail. Manipulating interest rates as a means to influence economy might be successful in a short term but in the long run can lead to disaster. The credit bubble is huge. It’s hard to tell when it pops, might not happen before the upcoming recession but the later it happens the bigger the impact will be.
In that case crypto and gold/silver are the best hedge. Even if we take the ridiculous volatility, it’s still the best insurance for the collapse scenario. To be honest that was mainly what got me interested in crypto.
Fiat will survive, (hopefully) come to realize its shortcomings and change but when the going is good, no one will dare to challenge the status quo
The fiat model might survive, but I’m pretty sure many currencies will be sacrificed or replaced along the way. Even dolar is vulnerable. If governments decide to discard petrodolar this might be a huge problem for USA and could lead to hyperinflation. Obviously weaker currencies are even more susceptible.
People switching to crypto or gold/silver could have a devastating snowball effect. That would literally mean crypto to the moon, while fiat becomes a toilet paper.
It’s just one of the possible scenarios. I won’t even pretend to know how future events will unfold.